Private sector lender RBL Bank, which went through a flux in late December, is now back on track and is comfortably placed with regards to deposits. “We are thankfully quite over the hump on that. Depositors have come back, there are levels of deposits that are today higher than December 31, 2021, and even higher than the time when we declared our (third-quarter) results. We are sitting back on some Rs 14,000 crore to Rs 15,000 crore of extra liquidity,” said Jaideep Iyer, Head-Finance, Strategy and Investor Relations, RBL Bank.

The private sector lender had reported a 2.58 per cent quarter on quarter drop in deposits to ₹73,637 crore as on December 31, 2021, with retail deposits and deposits from small business customers falling by 11.3 per cent sequentially.

Nervousness has settled down, says MD

Many depositors had withdrawn funds following the Reserve Bank of India appointing an additional director on its board and its MD and CEO Vishwavir Ahuja proceeding on leave. However, in the third-quarter results call, the bank’s interim MD and CEO Rajeev Ahuja said there was a brief challenge to deposits in the last week of December, but it had since recovered and was higher than levels on December 24, 2021. 

In an interaction with BusinessLine, Iyer attributed it to the nervousness of depositors, but said it has settled down since then. The appointment of a Managing Director and CEO, the process for which is currently underway, would bring further certainty.

The pressure on deposits is no longer there but overall deposit growth will remain muted as the lender is working to let go off bulk deposits, he said.

“We don’t want deposits beyond what growth is there in advances,” Iyer said, adding that advances will grow at about 10 to 15 per cent as the lender looks to rebalance its portfolio. “We have also consciously chosen not to do unsecured retail other than credit cards and microfinance. These will be substituted with doing more mortgage loans, more secured business loans, and more mid-market wholesale lending, all of which will be giving us a higher spread,” he said.

Iyer said the bank wants to move towards a strategy of lower volatility in earnings due to fluctuations in credit costs because of events like Covid, firming the balance sheet and not necessarily change headline growth, but focus on profitable growth.